Strayer ACC556 FULL COURSE Latest 2019 April Question # 00602309 Course Code : ACC556 Subject: Business Due on: 06/18/2019 Posted On: 06/18/2019 08:50 AM Tutorials: 1 Rating: 4.9/5

ACC556 Financial Accounting for Managers

CHAPTER 1 EXERCISE

Question 1 When
expenses exceed revenues, which of the following is true?

Answers:

a net loss
results

a net
income results

assets
equal liabilities

assets are
increased

Question 2 Which
of the following is not a common way that managers use the balance sheet?

Answers:

To analyze
the balances of assets, liabilities, and stockholders’ equity throughout the
accounting period

To
determine if the cash balance is sufficient for future needs

To analyze
the balance between debt and common stock financing

To analyze
the balance of accounts receivable on the last day of the accounting period MT

Question 3 Stockholders’
equity is comprised of

Answers:

common
stock and dividends.

common
stock and retained earnings.

dividends
and retained earnings.

net income
and retained earnings.

Question 4 External
users want answers to all of the following questions except

Answers:

Is the
company earning satisfactory income?

Will the
company be able to pay its debts as they come due?

Will the
company be able to afford employee pay raises this year?

How does
the company compare in profitability with competitors?

Question 5 One
way of stating the accounting equation is: Assets + Liabilities = Stockholders’
Equity.

Selected
Answer:

False

Answers:

True

False

ACC556 Financial Accounting for Managers

CHAPTER 2 EXERCISE

Question 1 Equipment
is classified on the balance sheet as

Answers:

a current
asset.

property, plant, and equipment.

an
intangible asset.

a long-term
investment.

Question 2 Each
of the following statements is justified by a fundamental quality or an
enhancing of quality accounting. Write the letter in the blank next to each
statement corresponding to the quality involved.

Question
Consistency	A company uses the same accounting principles from year to year.
Verifiable	Information that may be duplicated using the same methods.
Understandability	Information presented in a clear and concise fashion.
Relevance	Information that makes a difference in a decision.
Faithful representation	Information accurately depicts what really happened.

Question 3 For
accounting purposes, business transactions should be kept separate from the
personal transactions of the stockholders of the business.

Answers:

True

False

Question 4 Based
on the following data, what is the amount of current assets?

Accounts
payable……………………………………………………….. $62,000

Accounts
receivable……………………………………………………..
100,000

Cash………………………………………………………………………. 50,000

Intangible
assets…………………………………………………………
100,000

Inventory…………………………………………………………………. 138,000

Long-term
investments………………………………………………….
160,000

Long-term
liabilities………………………………………………………
200,000

Short-term
investments………………………………………………….
80,000

Notes
payable…………………………………………………………….
56,000

Property,
plant, and equipment……………………………………………
1,340,000

Prepaid
insurance………………………………………………………..
2,000

Answers:

$212,000

$370,000

$232,000

$230,000

Question 5 Garrison
Company prepares quarterly reports, which it distributes to all stockholders
and other entities that rely on its accounting information. Which of the
following is the best term for the key assumption in financial reporting that
Garrison is following?

Answers:

Monetary
unit assumption

Going
concern assumption

Economic
entity assumption

Periodicity assumption.

ACC556 Financial Accounting for Managers

CHAPTER 3 EXERCISE

Question 1 The
primary purpose of the trial balance is to.

Answers:

disclose
the complete effect of a transaction in one place.

make sure a
journal entry is not posted twice.

transfer
journal entries to the ledger accounts.

prove the equality of the debit and credit
amounts after posting.

Question 2 Which
one of the following represents the expanded basic accounting equation?

Answers:

Assets =
Liabilities + Common Stock + Dividends – Revenue – Expenses

Assets +
Dividends + Expenses = Liabilities + Common Stock + Revenues

Assets= Liabilities
+ Common Stock + Revenues – Expenses – Dividends

Assets = Revenues
+ Expenses – Liabilities

Question 3 Match
the items below by entering the appropriate code letter in the space provided.

Question
Account	An accounting record of increases and decreases in specific assets, liabilities, and stockholders’ equity items.
Normal account balance	The side which increases an account.
Debit	Left side of an account.
Revenue account	Has a credit normal balance
Ledger	The entire group of accounts maintained by a company.
Journal	Shows the debit and credit effects of specific transactions.
Posting	Transferring journal entries to ledger accounts.
Chart of accounts	A list of all the accounts used by a company.
Trial balance	A list of accounts and their balances at a given time.
Source document	Evidence that a transaction has taken place.

Question 4 If
total liabilities decreased by $4,000, then

Answers:

stockholders’
equity must have decreased by $4,000.

assets must have decreased by $4,000, or
stockholders’ equity must have increased by $4,000.

assets and
stockholders’ equity each increased by $2,000.

assets must
have increased by $4,000.

Question 5 All
of the following are characteristics of every accounting information system
except it is a system

Answers:

that
collects transaction data.

that
processes transaction data.

that
communicates financial information to decision makers.

of data storage hardware for the chart of
accounts.

ACC556 Financial Accounting for Managers

CHAPTER 4 EXERCISE

Question 1 An
adjusting entry to a prepaid expense is required to recognize expired expenses.

Answers:

True

False

Question 2 Management
usually wants ________ financial statements and the IRS requires all businesses
to file _________ tax returns.

Answers:

annual,
annual

monthly, annual

quarterly,
monthly

monthly,
monthly

Question 3 Unearned
revenue is a prepayment that requires an adjusting entry when services are
performed.

Answers:

True

False

Question 4 Given
the data below for a firm in its first year of operation, determine net income
under the cash basis of accounting.

Cash received from
customers $48,000

Accounts receivable
12,000

Cash paid for expenses 26,000

Accounts payable (related to
expenses) 3,000

Prepaid rent for next
period
7,000

Answers:

$22,000

$31,000

$24,000

$15,000

Question 5 Which
statement is?

Answers:

As long as
a company consistently uses the cash basis of accounting, generally accepted
accounting principles allow its use.

The use of the cash basis of accounting
violates both the revenue recognition and expense recognition principles.

The cash
basis of accounting is objective because no one can be certain of the amount of
revenue until the cash is received.

As long as
management is ethical, there are no problems with using the cash basis of
accounting.

ACC556 Financial Accounting for Managers

CHAPTER 5 EXERCISE

Question 1 Which
statement is in?

Answers:

The sales
revenue account is used to record the sales of goods held for resale to
customers.

Sales discounts are recorded as debits to the
sales revenue account.

The sales
revenue account is a revenue account.

The sales
revenue account has a normal credit balance and is closed at the end of the
accounting period.

Question 2 As
the president of Harter Company, you notice that no discounts have been taken
when settling accounts payables. What would be an acceptable explanation?

Answers:

All invoices have credit terms of n/30.

There is
not sufficient cash to pay within the discount period.

Discounts
are missed because no one knows how to enter them in the new accounting
software.

The full
amount of the invoice is being paid within the discount period and the treasurer
is pocketing the discount amount.

Question 3 With
the periodic inventory system, goods available for sale must be calculated
before cost of goods sold.

Answers:

True

False

Question 4 Which
of the following provides the best rationale regarding analysts’ views about
the information value of the gross profit rate versus the gross profit amount?

Answers:

The gross
profit amount is more informative than the gross profit rate because it is a
dollar amount rather than a ratio.

The gross profit amount is less informative
than the gross profit rate because the latter presents a meaningful
relationship between gross profit and net sales.

The gross
profit amount is more informative than the gross profit rate because the gross
profit rate is only used to describe a few industries while the gross profit
amount is universally used.

The gross
profit amount is more informative than the gross profit rate because high
volume operations are able to calculate the gross profit rate but not the gross
profit amount.

Question 5 Which
of the following items does not result in an adjustment in the merchandise
inventory account under a perpetual system?

Answers:

A purchase
of merchandise.

A return of
merchandise inventory to the supplier

Payment of freight costs for goods shipped to
a customer

Payment of
freight costs for goods received from a supplier

ACC556 Financial Accounting for Managers

CHAPTER 6 EXERCISE

Question 1 The
LIFO reserve is

Answers:

the difference between the value of the
inventory under LIFO and the value under FIFO.

an amount
used to adjust inventory to the lower of cost or market.

the
difference between the value of the inventory under LIFO and the value under
average cost.

the amount
used to adjust inventory to history cost.

Question 2 If
a company has no beginning inventory and the unit cost of inventory items does
not change during the year, the value assigned to the ending inventory will be
the same under LIFO and average cost flow assumptions.

Answers:

True

False

Question 3 Raw
materials inventories are the goods that a manufacturing company has completed
and are ready to be sold to customers.

Answers:

True

False

Question 4 Noise
Makers Inc has the following inventory data:

July 1 Beginning inventory 20 units at $19 $ 380

7 Purchases 70 units at $20 1,400

22 Purchases 10 units at $22 220

$2,000

A physical
count of merchandise inventory on July 30 reveals that there are 32 units on
hand. Using the average cost method, the value of ending inventory is

Answers:

$620.

$640.

$651.

$660.

Question 5 Which
statement concerning lower of cost or market (LCM) is in?

Answers:

LCM is an
example of a company choosing the accounting method that will be least likely
to overstate assets and income.

Under the LCM basis, market does not apply
because assets are always recorded and maintained at cost.

The LCM
basis uses current replacement cost because a decline in this cost usually
leads to a decline in the selling price of the inventory item.

LCM is
applied after one of the cost flow assumptions has been applied.

ACC556 Financial Accounting for Managers

CHAPTER 7 EXERCISE

Question 1 In
large companies, the independent internal verification procedure is often
assigned to

Answers:

computer
operators.

management.

internal
auditors.

outside
CPAs.

Question 2 Under
the concept of establishment of responsibility, how many people should have the
ultimate responsibility?

Answers:

Everyone in
the organization.

An
individual and his/her supervisor.

Only one
individual.

The CEO.

Question 3 Cash
equivalents are highly liquid investments that can be converted into a specific
amount of cash.

Answers:

True

False

Question 4 All
of the following are true regarding the management and monitoring of cash
except

Answers:

companies
may have plenty of sales, but insufficient cash to support operations.

the cash to
cash operating cycle for a manufacturer is generally shorter than that of a
merchandising company.

manufacturers
may experience a significant lag between the purchase of raw materials and the
receipt of cash from customers.

companies
should have sufficient cash to meet payments but minimize the amount of
non-revenue-generating cash on hand.

Question 5 Sam’s
Grocery Store has the following policy. ‘Only one cashier can have access to a
cash drawer.’ Which internal control principle supports this policy?

Answers:

Documentation
procedures.

Segregation
of duties.

Physical
controls.

Establishment
of responsibilities.

ACC556 Financial Accounting for Managers

CHAPTER 8 EXERCISE

Question 1 Bad
Debt Expense is considered

Answers:

an
avoidable cost in doing business on a credit basis.

an internal
control weakness.

a necessary risk of doing business on a credit
basis.

avoidable
unless there is a recession.

Question 2 An
aging of accounts receivable schedule is based on the premise that the longer
the period an account remains unpaid, the greater the probability that it will
eventually be collected.

Answers:

True

False

Question 3 The
expense recognition

Answers:

requires
that all credit losses be recorded when an individual customer cannot pay.

necessitates the recording of an estimated
amount for bad debts.

results in
the recording of a known amount for bad debt losses.

is not
involved in the decision of when to expense a credit loss.

Question 4 On
January 15, Nifty Company sells merchandise on account to Martinez Associates
for $3,000 with terms 3/10, n/30. On January 20, Martinez returns merchandise
worth $600 to Nifty. On January 24, payment is received from Martinez for the
balance due. What is the amount of cash received?

Answers:

$2,400

$2,328

$2,310

$1,680

Question 5 If
a company has significant concentrations of credit risk, it must discuss this
risk in the notes to its financial statements.

Answers:

True

False

ACC556 Financial Accounting for Managers

CHAPTER 9 EXERCISE

Question 1 Recording
depreciation on plant assets affects the balance sheet and the income
statement.

Answers:

True

False

Question 2 The
book value of an asset will equal its fair value at the date of sale if

Answers:

a gain on
disposal is recorded.

no gain or loss on disposal is recorded.

the plant
asset is fully depreciated.

a loss on
disposal is recorded.

Question 3 Which
of the following statements concerning financial statement presentation is
false?

Answers:

Intangibles
are reported separately under Intangible Assets.

The
balances of major classes of assets may be disclosed in the footnotes.

The
balances of the accumulated depreciation of major classes of assets may be
disclosed in the footnotes.

The balances of all individual assets, as they
appear in the subsidiary plant ledger, should be disclosed in the footnotes.

Question 4 A
plant asset was purchased on January 1 for $45,000 with an estimated salvage
value of $5,000 at the end of its useful life. The current year’s Depreciation
Expense is $5,000 calculated on the straight-line basis and the balance of the
Accumulated Depreciation account at the end of the year is $25,000. The
remaining useful life of the plant asset is

Answers:

10 years.

8 years.

5 years.

3 years.

Question 5 The
Modified Accelerated Cost Recovery System (MACRS) is a depreciation method that

Answers:

is used for tax purposes.

must be
used for financial statement purposes.

is required
by the SEC.

expenses an
asset over a single year because capital acquisitions must be expensed in the
year purchased.

ACC556 Financial Accounting for Managers

CHAPTER 10 EXERCISE

Question 1 Most
notes are not interest bearing.

Question 2 Unearned
revenues are received before goods are delivered or services are rendered.

Question 3 Material
gains or losses on bond redemption are reported as part of other gains/losses
on the income statement.

Question 4 Liabilities
are classified on the balance sheet as current or

Question 5 With
an interest-bearing note, the amount of assets received upon issuance of the
note is generally

ACC556 Financial Accounting for Managers

CHAPTER 11 EXERCISE

Question 1 A
corporation is not an entity that is separate and distinct from its owners.

Question 2 A
stockholder has the right to vote in the election of the board of directors.

Question 3 The
acquisition of treasury stock by a corporation increases total assets and total
stockholders’ equity.

Question 4 Cash
dividends are not a liability of the corporation until they are declared by the
board of directors.

Question 5 A
detailed stockholders’ equity section in the balance sheet will list the names
of individuals who are eligible to receive dividends on the date of record.

ACC556 Financial Accounting for Managers

CHAPTER 12 EXERCISE

Question 1 The
statement of cash flows is a required statement that must be prepared along
with an income statement, balance sheet, and retained earnings statement.

True

False

Question 2 The
acquisition of a building by issuing bonds would be considered an investing and
financing activity that did not affect cash.

Answers:

True

False

Question 3 The
statement of cash flows

Answers:

must be
prepared on a daily basis.

summarizes the operating, financing, and
investing activities of an entity.

is another
name for the income statement.

is a
special section of the income statement.

Question 4 Generally,
the most important category on the statement of cash flows is cash flows from

Answers:

operating activities.

investing
activities.

financing
activities.

significant
noncash activities.

Question 5 Which
of the following transactions does not affect cash during a period?

Answers:

Write-off of an uncollectible account.

Collection
of an accounts receivable.

Sale of
treasury stock.

Redeeming
bonds before maturity.

ACC556 Financial Accounting for Managers

CHAPTER 13 EXERCISE

Question 1 Comprehensive
income includes all revenues, expenses, gains, losses, and dividends.

Answers:

True

False

Question 2 A
primary purpose of vertical analysis is to observe trends over a three-year
period.

Answers:

True

False

Question 3 Leverage
and return on equity are closely related.

Answers:

True

False

Question 4 Because
pro forma earnings are based on specific rules, these amounts are highly
reliable.

Answers:

True

False

Question 5 Which
of the following income statement figures would probably be the best indicator
of a company’s future performance?

Answers:

Total
revenues

Income from operations

Net income

Gross
profit

ACC556 Financial Accounting for Managers

CHAPTER 21 EXERCISE

Question 1 A
benefit of budgeting is that it provides definite objectives for evaluating
performance.

Answers:

True

False

Question 2 Effective
budgeting requires clearly defined lines of authority and responsibility.

Answers:

True

False

Question 3 Financial
budgets must be completed before the operating budgets can be prepared.

Answers:

True

False

Question 4 The
budgeted income statement indicates the expected profitability of operations
for the next year.

Answers:

True

False

Question 5 Why
are budgets useful in the planning process?

Answers:

They
provide management with information about the company’s past performance.

They help communicate goals and provide a
basis for evaluation.

They
guarantee the company will be profitable if it meets its objectives.

They enable
the budget committee to earn their paycheck.

ACC556 Financial Accounting for Managers

CHAPTER 22 EXERCISE

Question 1 Management
by exception means that management will investigate areas where actual results
differ from planned results if the items are material and controllable.

Answers:

True

False

Question 2 Budget
reports provide the feedback needed by management to see whether actual
operations are on course.

Answers:

True

False

Question 3 The
manager of an investment center can improve ROI by reducing average operating
assets.

Answers:

True

False

Question 4 What
is budgetary control?

Answers:

Another
name for a flexible budget

The degree
to which the CFO controls the budget

The use of budgets in controlling operations

The process
of providing information on budget differences to lower level managers

Question 5 What
is the primary difference between a static budget and a flexible budget?

Answers:

The static
budget contains only fixed costs, while the flexible budget contains only
variable costs.

The static budget is prepared for a single
level of activity, while a flexible budget is adjusted for different activity
levels.

The static
budget is constructed using input from only upper level management, while a
flexible budget obtains input from all levels of management.

The static
budget is prepared only for units produced, while a flexible budget reflects
the number of units sold.

ACC556 Financial Accounting for Managers

Midterm Exam Part 1

Question 1 Lankston
Company began the year by issuing $90,000 of common stock for cash. The company
recorded revenues of $825,000, expenses of $720,000, and paid dividends of
$45,000. What was Lankston’s net income for the year?

Selected
Answer:

$105,000

Answer:

$105,000

Question 2 Marvin
Services Corporation had the following accounts and balances:

Accounts
payable $18,000 Equipment $21,000

Accounts
receivable 3,000 Land 21,000

Buildings ? Unearned
service revenue 6,000

Cash 9,000 Total
stockholders’ equity ?

If the
balance of the Buildings account was $45,000 and the equipment was sold for
$21,000, what would be the total of stockholders’ equity?

Question 3 An
advantage of using the periodic inventory system is that it requires less
record keeping than the perpetual inventory system.

Question 4 Financing
activities include the purchase or sale of long-lived assets or the purchase or
sale of investment securities.

Question 5 The
economic resources that are owned by a business are called stockholders’
equity.

Question 6 Requiring
employees to take vacations is a weakness in the system of internal controls
because it does not promote operational efficiency.

Question 7 An
aging of accounts receivable schedule is based on the premise that the longer
the period an account remains unpaid, the greater the probability that it will
eventually be collected.

Question 8 A
concentration of credit risk is a threat of nonpayment from a single customer
or class of customers that could adversely affect the financial health of the
company.

Question
9To obtain maximum benefit from a bank reconciliation, the reconciliation
should be prepared by the employee authorized to sign checks.

Question
10Owners of business firms are the only people who need accounting information.

ACC556 Financial Accounting for Managers

Midterm Exam Part 2

Question
1Which of these would cause the inventory turnover ratio to increase the most?

Question 2Which
one of the following is not an objective of a system of internal controls?

Question 3 A
merchandiser will earn an operating income of exactly $0 when

Question 4 Which
of the following is least likely to help a company minimize losses as credit
standards are relaxed?

Question 5 Dobler
Company gathered the following reconciling information in preparing its June
bank reconciliation:

Cash
balance per books, 6/30 $8,400

Deposits in
transit
600

Notes
receivable and interest collected by bank
1,480

Bank charge
for check printing 50

Outstanding
checks
3,000

NSF
check
280

The
adjusted cash balance per books on June 30 is

Question 6 A
company usually determines the amount of supplies used during a period by:

Question 7 All
of the following are true regarding the management and monitoring of cash
except

Question 8 What
is an advantage of using the multiple-step income statement?

Question 9 Which
statement is in?

Question 10
Receivables are

ACC556 Financial Accounting for Managers

FINAL Exam Part 1

Question 1 A
budget can be used as a basis for evaluating performance.

Question 2 Intangible
assets are rights, privileges, and competitive advantages that result from
ownership of long-lived assets without physical substance.

Question 3 The
master budget reflects management’s long-term plans encompassing five years or
more.

Question 4 On
January 1, 2014, Ermler Company, a calendar-year company, issued $1,000,000 of
notes payable, of which $250,000 is due on January 1 for each of the next four
years. The proper balance sheet presentation on December 31, 2014, is

Question 5 A
company whose current liabilities exceed its current assets may have a
liquidity problem.

Question 6 The
market rate of interest is often called the

Question 7 The
partnership form of business organization

Question 8 On
January 1, a machine with a useful life of five years and a residual value of
$15,000 was purchased for $75,000. What is the depreciation expense for year 2
under straight-line depreciation?

Question 9 During
2014, Phelps Corporation reported net sales of $3,000,000, net income of
$1,320,000, and depreciation expense of $80,000. Phelps also reported beginning
total assets of $1,000,000, ending total assets of $1,500,000, plant assets of
$800,000, and accumulated depreciation of $500,000. Phelps’s asset turnover
ratio is

Question 10
Under the corporate form of business organization

ACC556 Financial Accounting for Managers

FINAL Exam Part 2

Question 1If
the board of directors authorizes a $100,000 restriction of retained earnings
for a future plant expansion, the effect of this action is to

Question 2 A
revenue generally

Question 3 Holden
Packaging Corporation began business in 2014 by issuing 80,000 shares of $5 par
common stock for $8 per share and 20,000 shares of 6%, $10 par preferred stock
for par. At year end, the common stock had a market value of $10. On its
December 31, 2014 balance sheet, Holden Packaging would report

Question 4 Assume
the following sales data for a company:

2015 $910,000

2014 $770,000

2013 700,000

If 2013 is
the base year, what is the percentage increase in sales from 2013 to 2014?

Question 5 Which
one of the following items is not necessary in preparing a statement of cash
flows?

Question 6 Which
of the following is not typically a characteristic experienced by a company
during the growth phase of the corporate life cycle?

Question 7 Quincy
Corp. earned controllable margin of $500,000 on sales of $6,400,000. The
division had average operating assets of $5,200,000. The company requires a
return on investment of at least 8%. How much is residual income?

Question 8 The
date on which a cash dividend becomes a binding legal obligation is on the

Question 9 A
manager of a cost center is evaluated mainly on

Question 10
A flexible budget

ACC556 Financial Accounting for Managers

Week 1 Discussion

Financial
Statements

For this
week’s collaborative activity, review Apple Inc.’s most recent financial
statements. Click to review Apple’s Financial Information.

Based on
your analysis of Apple’s most recent financial statements, predict whether
Apple’s financial health will likely improve or deteriorate over the next five
(5) years. Provide a rationale for your response.

Examine
Apple’s statement of cash flows. Recommend at least two (2) actions that Apple
could take in order to maximize the use of its cash flows. Provide a rationale
for your response.

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